First income tax was passed to pay for Civil War

7:32 PM,
Aug. 4, 2013

Sen. William Fessenden pushed bill for nation's first income tax.

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As the Civil War began, the United States was in poor financial condition. The country had not recovered from the 1857 recession, which was perhaps the first global recession. Several years of prosperity had resulted in speculation and over expansion, and when a series of bad investments led to the collapse of the Ohio Life Insurance and Trust Co., the economy quickly shrank as terrified banks called loans, companies fired workers and revenues stopped flowing.

The U.S. government was running consistent deficits, and the new president, Abraham Lincoln, immediately was faced with how to ...